Metals News
Euro May Extend Gains as Greece Prepares New Deficit Cut Plan
data analysis
Mar 3,2010

NEWYORK, Mar. 3  -- The euro may advance for a second day against the dollar as Greece prepares to unveil new measures to slash the European Union's biggest budget deficit, spurring speculation a solution to the country's debt crisis may be near.

The 16-nation euro may rise against the pound for a sixth day after Greek Prime Minister George Papandreou told his party's parliamentarians that "painful" decisions are coming. The Aussie dollar traded near its strongest in a decade versus New Zealand's currency before a report forecast to show Australia's economy expanded for a fourth quarter.

"A deal, if realized, will remove some uncertainties over the debt situation in Greece," said Tomohiro Nishida, a Tokyo- based foreign-currency dealer at Chuo Mitsui Trust & Banking Co. "It will then take some pressure off from the euro."

The euro traded at $1.3613 at 8:09 a.m. in Tokyo from $1.3615 in New York yesterday. The common currency was at 90.96 British pence from 90.94 pence yesterday and bought 120.86 yen from 120.96 yen. The dollar was at 88.78 yen from 88.85 yen.

Australia's currency traded at NZ$1.2990 from NZ$1.2980 yesterday, when it touched NZ$1.30, the most since 2000. It bought 90.39 U.S. cents from 90.35 cents yesterday, when it reached 90.60 cents, the strongest since Feb. 23.

Australia's gross domestic product grew 0.9 percent in the fourth quarter, according to the median forecast of 18 economists in a Bloomberg News survey. The statistics bureau will release the data at 11:30 a.m. in Sydney.

Deeper Cuts

The Greek government will announce as much as 4.8 billion euros ($6.5 billion) of additional spending cuts today ahead of a March 16 deadline, bowing to pressure from the EU and investors to do more to tame its budget shortfall, a person familiar with the plan said.

The new measures will include higher tobacco, alcohol and sales taxes and deeper cuts in public workers' bonus payments, said the person, who declined to be identified because the details aren't public.

The euro yesterday touched $1.3436, the lowest since May 18, amid concern Greece may struggle to reach an agreement with Germany on aid. An announcement on spending cuts today would come two days before Papandreou meets Germany's Angela Merkel and may help the chancellor justify supporting Greece to taxpayers and political opponents who say the country shouldn't be bailed out after living beyond its means.

"The government is forced to ask all Greeks to contribute," Papandreou said in Athens. "Now we need the support of our partners. To provide it they must convince their citizens, from whom they are also asking for sacrifices, that the Greeks are doing what must be done."

Credit-Default Swaps

The euro strengthened yesterday as credit-default swaps linked to Greek government bonds dropped to 320.09 basis points, the lowest since Jan. 19, according to CMA Datavision prices.

"Greek CDS have come in sharply," said Alan Ruskin, head of international currency strategy in North America at Royal Bank of Scotland Group Plc in Stamford, Connecticut. "The Greeks and the core countries like Germany and France will reach an agreement and that will likely place a floor on the euro- dollar."

To contact the reporters on this story: Yasuhiko Seki in Tokyo at; Ben Levisohn in New York at


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